Learning to be good at anything in life takes time. Unless you have the incredible good fortune to be blessed with an insane amount of talent that results in you not needing to practice to improve from birth, chances are you're going to have to put in some time and effort to gain the experience you need to grow and improve.
For most people, this includes their investment choices. Usually when you're starting out and are inexperienced, you're going to make mistakes. Learning to avoid these comes with time. And whilst investing in property may sound fairly easy, managing your own investment properties requires the same business mindset that you'd apply to any other type of investment. Most people think they can buy a house, fix it up a little and then rent it out for more than they're paying each week on the mortgage, it often doesn't go quite so smoothly. So to help inexperienced landlords everywhere, here are a few quick pointers on easy mistakes to avoid.
Make sure you run comprehensive checks on potential tenants. It may be tempting to rush ahead with an applicant to get the rent flowing in, but letting a less than desirable person loose in your home could end up being a costly mistake.
Also, don't assume that you will always have someone in your house. Make sure you can pay the mortgage if your investment property is empty. Do your own financial due diligence so that should you have no tenant for a month or even a few, you're not feeling the pressure financially.
Budget for repairs and ongoing maintenance. You might be prepared to live with a leaky tap or a garage door you have to force up with your brute strength, but your tenant probably won't be. Make sure the rent you're charging is adequate to cover a portion of ongoing maintenance costs and be realistic that at some point you may need to pull money out of your own pocket to cover bigger one-off expenses.
Don't rely on the honesty of your tenants – there's no friends in business. Make sure you have a lease agreement. Even if you're leasing your property to friends, if anything happens to go wrong, you're going to want to have a binding agreement in writing to rely on. Make sure you're aware of the relevant laws in your state so you use an appropriate form. In the same vein, make sure you keep written evidence of conversations and interactions with your tenants.
Finally, don't treat your investment property like a hobby. Although you may think it's not as serious an investment as your share portfolio for example, if you want your property to become profitable, you need to operate it as a business like you would anything else. Make sure the basics are in order like having a separate bank account for the property, use a bookkeeping system and use tax professionals to ensure you're doing the right thing!
Actually, one more thing – don't neglect your tenants. If you want good people in your property, you need to be a good landlord. The home is still your responsibility and you need to take care of it so that they will.